Oil markets finished the New York session lower once again overnight, as the market positions for an expected reduction in production cuts by OPEC+ tomorrow. The fall was helped along by an unexpectedly significant rise in US API crude inventories. Brent crude fell by 1.25% to USD62.40 a barrel, and oilI fell by 1.25% to USD59.45 a barrel.
The more positive sentiment sweeping Asian financial markets today has lifted oil prices as well—both contracts gaining 0.80% to USD92.95 and USD59.90 a barrel, respectively. Gains are likely to be limited ahead of the OPEC+ decision tomorrow and official crude inventories from the US this evening.
The six per cent fall by Brent crude in the past week is unlikely to cause too many concerns by OPEC+, but if Brent retreats much further in the next 24 hours, OPEC+ may spring a nasty no-reduction surprise. At this stage, I suspect a Brent crude price of around USD65.00 a barrel is their ideal comfort zone.
Brent crude has support around USD62.50 and then USD62.00 a barrel, with resistance at USD64.50 and USD67.50 a barrel. A failure of USD62.00 could extend losses to USD60.00 a barrel. WTI has support at USD58.75 and USD57.50 a barrel, with resistance at USD60.00, USD61.00 and USD63.80 a barrel.
Gold clings on to a modest recovery
Gold prices climbed by 0.80% to USD1738.50 an ounce overnight, but its recovery was tenuous, and its technical outlook remains gruesome. Gold’s fate remains entirely in the hands of movements in other asset classes, notably US bonds. Another rise in the US yields this week, almost certainly signalling a retreat below USD1700.00 an ounce. Notably, gold lacks upward momentum, having tested and failed to recapture the critical USD1760.00 price level on Monday.
Sentiment has ebbed in Asia, with regional investors more focused on local equity markets. Gold has eased by 0.20% to USD1735.00 an ounce this morning in quiet trading.
Gold has resistance at USD1740.00 and USD1760.00 an ounce, its 50% Fibonacci and breakout point. Its next support is at USD1680.00 an ounce, the 61.80% Fibonacci retracement. Failure clears the way for a much deeper fall to the USD1600.00 an ounce region.